Two assets whose returns move in the same direction and have a correlation coefficient of +1 are both very risky assets.

Name: Two assets whose returns move in the same direction and have a correlation coefficient of +1 are both very risky assets.
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Quizplus · Accepted Answer

A correlation coefficient of +1 indicates perfect positive correlation, meaning the assets move together, but it does not necessarily imply that both assets are very risky. Risk is determined by other factors such as volatility, not just correlation.

Two Assets Whose Returns Move in the Same Direction and Have